KUBIENT, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements generally relate to future events or our future financial or
operating performance and may include statements concerning, among other things,
our business strategy (including anticipated trends and developments in, and
management plans for, our business and the markets in which we operate),
financial results, the impact of COVID-19 on our business, operations, and the
markets and communities in which we, our clients, and partners operate, results
of operations, revenues, operating expenses, and capital expenditures, sales and
marketing initiatives and competition. In some cases, you can identify
forward-looking statements because they contain words such as "may," "might,"
"will," "should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates," "predicts,"
"suggests," "potential" or "continue" or the negative of these words or other
similar terms or expressions that concern our expectations, strategy, plans or
intentions. These statements are not guarantees of future performance; they
reflect our current views with respect to future events and are based on
assumptions and are subject to known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from expectations or results projected or implied by
forward-looking statements.

We discuss many of these risks in other filings we make from time to time with
the Securities and Exchange Commission (the "SEC"). Also, these forward-looking
statements represent our estimates and assumptions only as of the date of this
Quarterly Report on Form 10-Q, which are inherently subject to change and
involve risks and uncertainties. Unless required by federal securities laws, we
assume no obligation to update any of these forward-looking statements, or to
update the reasons actual results could differ materially from those
anticipated, to reflect circumstances or events that occur after the statements
are made. Given these uncertainties, investors should not place undue reliance
on these forward-looking statements.

Investors should read this Quarterly Report on Form 10-Q and the documents that
we reference in this report and have filed with the SEC, including our Annual
Report on Form 10-K, filed with the SEC on March 31, 2022, with the
understanding that our actual future results may be materially different from
what we expect. We qualify all of our forward-looking statements by these
cautionary statements. Unless the context requires otherwise, references to the
"Company," "Kubient," "we," "us" and "our" refer to Kubient, Inc., a Delaware
corporation and its wholly-owned subsidiary, Fidelity Media, LLC, a Delaware
limited liability company. For explanations of certain terms used in this
Quarterly Report on Form 10-Q, please read "Glossary" beginning on page A-1.

Insight

Kubien, Inc. (“kubient,” “we”, “our” or the “Company”), a Delaware
company, was incorporated in May 2017 to solve some of the biggest problems facing the global digital advertising industry.

The Company's experienced team of marketing and technology veterans has
developed the Audience Marketplace, a modular, highly scalable, transparent,
cloud-based software platform for real-time trading of digital, Programmatic
Advertising. The Company's platform's open marketplace gives both advertisers
(ad space buyers) and Publishers (ad space sellers) the ability to use machine
learning in the most critical parts of any Programmatic Advertising inventory
auction, while simultaneously and significantly reducing those advertisers and
Publishers' exposure to fraud, specifically in the Pre-bid environment.

The Company also provides unique capabilities with its proprietary pre-bid ad
fraud detection & prevention, Kubient Artificial Intelligence ("KAI"), which has
the ability to stop fraud in the critical 300 millisecond window before an
advertiser spends their budget on fraudulent ad space. The technology is powered
by deep learning algorithms, the latest advancement in machine learning, which
allows the Company to ingest vast amounts of data, find complex patterns in the
data and make accurate predictions. Most importantly, it's self-learning,
getting smarter and more accurate over time. This provides advertisers a
powerful tool capable of preventing the purchase of ad fraud.

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The Company believes that its Audience Marketplace technology allows advertisers
to reach entire audiences rather than buying single impressions from disparate
sources. By becoming a one stop shop for advertisers and publishers, providing
them with the technology to deliver meaningful messages to their target
audience, all in one place, on a single platform that is computationally
efficient, transparent, and as safely fraud-free as possible, the Company
believes that its Audience Marketplace platform (and the application of the
platform's machine learning algorithms) leads to increased publisher revenue,
lower advertiser cost, reduced latency and increased economic transparency
during the advertising auction process.

Russian sanctions

The current invasion of Ukraine by Russia has escalated tensions among the
United States, the North Atlantic Treaty Organization ("NATO") and Russia. The
United States and other NATO member states, as well as non-member states, have
announced new sanctions against Russia and certain Russian banks, enterprises
and individuals. Violation of such sanctions could result in civil and criminal,
monetary and non-monetary penalties, disruptions to our business, limitations on
our ability to import and export products and services, and damage to our
reputation. As a result, the Company had terminated 10 contractors performing
software engineering services as of March 25, 2022. As a result, the Company
does not currently employ or contract with any engineers located in Russia. The
current political climate has reduced the available number of engineers for hire
in such regions. Furthermore, on-going conflict in Ukraine and the spread of
political tensions in surrounding areas could increase the threat of
cyberwarfare as well as wide-spread internet service interruptions, which would
likely disrupt or delay the operations of many digitally-focused companies
such
as our own.

COVID-19

The novel coronavirus ("COVID-19") pandemic continues to impact global economic
conditions, as well as the Company's operations. COVID-19 had a meaningful
negative impact on our financial condition, cash flows and results of operations
during 2020, as revenues declined and we reduced spending in light of COVID-19
uncertainty. Although we continued to experience disruption and volatility
during 2021, which could continue to have an adverse effect on our revenues and
earnings in 2022, the ultimate economic impact of the pandemic remains fluid, as
there continue to be periods of COVID-19 resurgence in various parts of the
world. The extent of the impact of the COVID-19 pandemic in 2022 on our
operational and financial performance will depend on a variety of factors, some
of which are outside our control, including the duration and spread of COVID-19
and its variants, and its impact on our clients, partners, industry, and
employees, all of which are uncertain at this time and cannot be accurately
predicted.

Similarly, the economic uncertainty caused by the COVID-19 pandemic has made and
may continue to make it difficult for us to forecast revenue and operating
results and to make decisions regarding operational cost structures and
investments. We have committed, and we plan to continue to commit, resources to
grow our business, employee base, and technology development, and such
investments may not yield anticipated returns, particularly if worldwide
business activity continues to be impacted by the COVID-19 pandemic. The
duration and extent of the impact from the COVID-19 pandemic depend on future
developments that cannot be accurately predicted at this time, and if we are not
able to respond to and manage the impact of such events effectively, our
business may be harmed.

There can be no assurance that precautionary measures, whether adopted by us or
imposed by others, will be effective, and such measures could negatively affect
our sales, marketing, and client service efforts, delay and lengthen our sales
cycles, decrease our employees', clients', or partners' productivity, or create
operational or other challenges, any of which could harm our business and
results of operations.

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Results of Operations

Three months completed June 30, 2022 Compared to the three months ended June 30, 2021

The following table presents the results of operations for the three months ended June 30, 2022 and 2021:

                                                      For the Three Months Ended
                                                              June 30,
                                                        2022             2021

Net Revenues                                        $     400,351    $     497,568

Costs and Expenses:
Sales and marketing                                     1,050,423          504,380
Technology                                                959,157          619,692
General and administrative                              1,509,208        1,108,280
Impairment loss on intangible assets                    2,626,974          

Impairment loss on property and equipment                  49,948          

Impairment loss on goodwill                               463,000          

Loss accrual on customer contract                       (413,918)          
     -
Total Costs and Expenses                                6,244,792        2,232,352
Loss From Operations                                  (5,844,441)      (1,734,784)

Other (Expense) Income:
Interest expense                                          (2,536)          (1,576)
Interest income                                             2,734           33,355
Change in fair value of contingent consideration           23,378          
     -
Other income                                               10,974                -
Total Other Income                                         34,550           31,779
Net Loss                                            $ (5,809,891)    $ (1,703,005)


Net Revenues

For the three months ended June 30, 2022, net revenues decreased by $97,217, or
20%, to $400,351 from $497,568 for the three months ended June 30, 2021. The
decrease was primarily attributable to a decrease of $495,000 of net revenues
associated with a major customer as compared to the 2021 period, partially
offset by revenues generated in the 2022 period related to customer contracts
acquired in connection with our acquisition of MediaCrossing in November 2021.

See Cumulative loss on customer contract for a discussion of an estimated cumulative loss recorded during the three months ended June 30, 2022 associated with a contract with a customer.

Sales and Marketing

For the three months ended June 30, 2022, sales and marketing expenses increased
by $546,043, or 108%, to $1,050,423 from $504,380 for the three months ended
June 30, 2021. The increase is primarily due to an increase in headcount costs
of approximately $686,000, partially offset by a decrease in selling expenses of
approximately $98,000 and consulting expense of approximately $36,000.

Technology

For the three months ended June 30, 2022, technology expenses increased by
$339,465, or 55%, to $959,157 from $619,692 for the three months ended June 30,
2021. The increase is primarily due to an increase in headcount costs of
approximately $108,000, hosting fees of approximately $107,000, non-cash
stock-based compensation of approximately $60,000, amortization of approximately
$87,000 and software expenses of approximately $33,000, partially offset by a
decrease in consulting expense of approximately $22,000.

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General and Administrative

For the three months ended June 30, 2022, general and administrative expenses
increased by $400,928, or 36%, to $1,509,208 from $1,108,280 for the three
months ended June 30, 2021. The increase is primarily due to increases in
headcount costs of approximately $80,000, state taxes of approximately $110,000,
non-cash stock-based compensation of approximately $238,000, insurance expense
of approximately $10,000, office expenses of approximately $48,000, director
fees of approximately $33,000, and dues and software subscriptions of
approximately $26,000, partially offset by a decrease in professional services
of approximately $72,000 as well as a reduction in consulting expense of
approximately $70,000.

Impairment Loss on Intangible Assets, Property and Equipment, and Goodwill

During the three months ended June 30, 2022, we recognized an impairment loss on
intangible assets of $2,626,974, an impairment loss on property and equipment of
$49,948 and an impairment loss on goodwill of $463,000.

During the three months ended June 30, 2022, we identified triggering events
that indicated its finite-lived intangible assets and goodwill were at risk of
impairment and, as such, performed the required quantitative impairment
assessment to ultimately evaluate whether carrying value exceeded fair value.
The primary triggers for the impairment review were a loss of customers as well
as a reduction in the value of Kubient's market capitalization. As a result of
the quantitative assessments, we determined the intangible assets and goodwill
were fully impaired.

Accumulation of customer contract losses

During the three months ended June 30, 2022, we reversed $413,918 of the loss
accrual on customer contract related to media costs incurred associated with a
contract with a customer. The reversal was a result of our recognition of
revenue during the three months ended June 30, 2022 that was related to the loss
accrual we recognized in the previous quarter. We will continue to monitor
this
loss accrual going forward.

Other Income
For the three months ended June 30, 2022, other income increased by $2,771, or
9%, to $34,550 from other income of $31,779 for the three months ended June
30,
2021.

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Semester completed June 30, 2022 Compared to the six months ended June 30, 2021

The following table presents the results of operations for the six months ended
June 30, 2022 and 2021:

                                                       For the Six Months Ended
                                                               June 30,
                                                         2022             2021
Net Revenues                                        $    1,645,655    $   1,205,325
Costs and Expenses:
Sales and marketing                                      2,383,433        1,261,330
Technology                                               2,114,856        1,139,447
General and administrative                               3,691,757        2,363,852
Impairment loss on intangible assets                     2,626,974         

Impairment loss on property and equipment                   49,948         

Impairment loss on goodwill                                463,000         

Loss accrual on customer contract                          375,687         
      -
Total Costs and Expenses                                11,705,655        4,764,629
Loss From Operations                                  (10,060,000)      (3,559,304)
Other (Expense) Income:
Interest expense                                           (6,408)          (3,210)
Interest income                                              5,025           62,664
Change in fair value of contingent consideration           613,000         
      -
Other income                                                11,000              233
Total Other Income                                         622,617           59,687
Net Loss                                            $  (9,437,383)    $ (3,499,617)


Net Revenues
For the six months ended June 30, 2022, net revenues increased by $440,330, or
37%, to $1,645,655 from $1,205,325 for the six months ended June 30, 2021. The
increase in net revenues is primarily attributable to net revenues generated
related to customer contracts acquired in connection with our acquisition of
MediaCrossing in November 2021, partially offset by a decrease of $696,000 of
net revenues associated with a major customer as compared to the 2021 period.

See Cumulative Loss on Customer Contract for a discussion of an estimated cumulative loss recorded during the six months ended June 30, 2022 associated with a contract with a customer.

Sales and Marketing

For the six months ended June 30, 2022, sales and marketing expenses increased
by $1,122,103, or 89%, to $2,383,433 from $1,261,330 for the six months ended
June 30, 2021. The increase is primarily due to an increase in headcount costs
of approximately $1,480,000, and software tools of approximately $58,000,
partially offset by a decrease in non-cash stock-based compensation of
approximately $212,000 and selling expense of approximately $140,000.

Technology

For the six months ended June 30, 2022, technology expenses increased by
$975,409, or 86%, to $2,114,856 from $1,139,447 for the six months ended June
30, 2021. The increase is primarily due to an increase in headcount costs of
approximately $381,000, hosting fees of approximately $281,000, non-cash
stock-based compensation of approximately $137,000 and amortization of
approximately $169,000.

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General and administrative

For the six months ended June 30, 2022, general and administrative expenses
increased by $1,327,905, or 56%, to $3,691,757 from $2,363,852 for the six
months ended June 30, 2021. The increase is primarily due to increases in
professional fees of approximately $659,000, non-cash stock-based compensation
of approximately $538,000, office expenses of approximately $100,000, director
fees of approximately $66,000, headcount costs of approximately $59,000, state
taxes of approximately $35,000, insurance expense of approximately $21,000, dues
and software subscriptions of approximately $51,000, partially offset by a
decrease in consulting services expense of approximately $125,000 as well as a
reduction in recruiting expense of approximately $77,000.

Impairment Loss on Intangible Assets, Property and Equipment, and Goodwill

During the six months ended June 30, 2022, we recognized an impairment loss on
intangible assets of $2,626,974, an impairment loss on property and equipment of
$49,948 and an impairment loss on goodwill of $463,000.

During the three months ended June 30, 2022, we identified triggering events
that indicated its finite-lived intangible assets and goodwill were at risk of
impairment and, as such, performed the required quantitative impairment
assessment to ultimately evaluate whether carrying value exceeded fair value.
The primary triggers for the impairment review were a loss of customers as well
as a reduction in the value of Kubient's market capitalization. As a result of
the quantitative assessments, we determined the intangible assets and goodwill
were fully impaired.

Accumulation of customer contract losses

In the six months ended June 30, 2022we recorded a provision for an estimated loss on a customer contract of $375,687 related to media costs incurred under a contract with a client. We will continue to monitor this accumulation of losses going forward.

Other Income

For the six months ended June 30, 2022, other income increased by $562,930, or
943%, to $622,617 from $59,687 for the six months ended June 30, 2021. The
increase is primarily due to a gain recognized related to a decrease in the fair
value of the earnout shares issuable to MediaCrossing.

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Non-GAAP Measures

Adjusted EBITDA
The Company defines EBITDA as net income (loss) before interest, taxes and
depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA,
further adjusted to eliminate the impact of certain non-recurring items and
other items that we do not consider in our evaluation of our ongoing operating
performance from period to period. These items will include stock-based
compensation, restructuring and severance costs, transaction costs, acquisition
costs, certain other non-recurring charges and gains that the Company does not
believe reflects the underlying business performance.

For the three and six months ended June 30, 2022 and 2021, EBITDA and Adjusted EBITDA consisted of the following:

                                                          For the Three Months Ended         For the Six Months Ended
                                                                  June 30,                          June 30,
                                                            2022             2021             2022             2021
Net Loss                                                $ (5,809,891)    $ (1,703,005)    $ (9,437,383)    $ (3,499,617)
Interest expense                                                2,536            1,576            6,408            3,210
Interest income                                               (2,734)         (33,355)          (5,025)         (62,664)
Depreciation and amortization                                 168,772           81,914          330,993          159,293
EBITDA                                                    (5,641,317)      (1,652,870)      (9,105,007)      (3,399,778)

Adjustments:
Stock-based compensation expense                              288,971           19,538          721,627          260,752
Impairment loss on intangible assets                        2,626,974                -        2,626,974                -
Impairment loss on property and equipment                      49,948                -           49,948                -
Impairment loss on goodwill                                   463,000                -          463,000                -
Change in fair value of contingent consideration             (23,378)      
         -        (613,000)                -
Adjusted EBITDA                                         $ (2,235,802)    $ (1,633,332)    $ (5,856,458)    $ (3,139,026)

Adjusted Loss Per Share                                 $      (0.16)    $      (0.12)    $      (0.41)    $      (0.24)
Weighted Average Common Shares Outstanding -
Basic and Diluted                                          14,316,483      

13,983,195 14,286,655 13,307,766

EBITDA and Adjusted EBITDA is a financial measure that is not calculated in
accordance with accounting principles generally accepted in the United States of
America ("U.S. GAAP"). Management believes that because Adjusted EBITDA excludes
(a) certain non-cash expenses (such as depreciation, amortization and
stock-based compensation) and (b) expenses that are not reflective of the
Company's core operating results over time (such as stock-based compensation
expense), this measure provides investors with additional useful information to
measure the Company's financial performance, particularly with respect to
changes in performance from period to period. The Company's management uses
EBITDA and Adjusted EBITDA (a) as a measure of operating performance, (b) for
planning and forecasting in future periods, and (c) in communications with the
Company's board of directors concerning the Company's financial performance. The
Company's presentation of EBITDA and Adjusted EBITDA are not necessarily
comparable to other similarly titled captions of other companies due to
different methods of calculation and should not be used by investors as a
substitute or alternative to net income or any measure of financial performance
calculated and presented in accordance with U.S. GAAP. Instead, management
believes EBITDA and Adjusted EBITDA should be used to supplement the Company's
financial measures derived in accordance with U.S. GAAP to provide a more
complete understanding of the trends affecting the business.

Although Adjusted EBITDA is frequently used by investors and securities analysts
in their evaluations of companies, Adjusted EBITDA has limitations as an
analytical tool, and investors should not consider it in isolation or as a
substitute for, or more meaningful than, amounts determined in accordance with
U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical
tool are (a) they do not reflect the Company's interest income and expense, or
the requirements necessary to service interest or principal payments on the
Company's debt, (b) they do not reflect future requirements for capital
expenditures or contractual commitments, and (c) although depreciation and
amortization charges are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and non-GAAP measures do
not reflect any cash requirements for such replacements.

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Cash and capital resources

We measure our liquidity in several ways, including:

                               June 30,      December 31,
                                 2022            2021
                             (unaudited)

Cash and cash equivalents $17,683,885 $24,907,963
Working capital

              $ 16,769,071    $  22,676,301


Availability of additional funds

As a result of its public offerings and the related note conversions, the
Company believes its current cash on hand is sufficient to meet its operating
and capital requirements for at least the next twelve months from the date these
financial statements are issued. Our operating needs include the planned costs
to operate our business, including amounts required to fund working capital and
capital expenditures. Our future capital requirements and the adequacy of our
available funds will depend on many factors, including our ability to
successfully commercialize our products and services, competing technological
and market developments, and the need to enter into collaborations with other
companies or acquire other companies or technologies to enhance or complement
our product and service offerings.

Cash flow

Semester completed June 30, 2022 Compared to the six months ended June 30, 2021

Our sources and uses of cash were as follows:

Cash flow from operating activities

We experienced negative cash flows from operating activities for the six months
ended June 30, 2022 and 2021 in the amounts of $6,856,660 and $2,980,648,
respectively. The net cash used in operating activities for the six months ended
June 30, 2022 was primarily a result of cash used to fund a net loss of
$9,437,383, adjusted for net non-cash expenses of $3,586,542, and $989,270 of
net cash used in changes in the levels of operating assets and liabilities. The
net cash used in operating activities for the six months ended June 30, 2021 was
primarily a result of cash used to fund a net loss of $3,499,617, adjusted for
non-cash expenses of $420,045, and $98,924 of net cash used in changes in the
levels of operating assets and liabilities.

Cash flow from investing activities

Net cash used in investing activities for the six months ended June 30, 2022 was
$0. Net cash used in investing activities for the six months ended June 30, 2021
was $1,124,253, which was attributable to purchases of intangible assets and
property and equipment.

Cash flow from financing activities

Net cash used in financing activities for the six months ended June 30, 2022 was
$367,418, which was attributable to repayments of our PPP loan of $149,843 as
well as repayments of financed director and officer insurance premiums of
$217,575. Net cash provided by financing activities for the six months ended
June 30, 2021 was $9,785,210, which was provided by the exercise of options and
warrants, partially offset by payment of deferred offering costs of $10,300.

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Critical accounting estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America, or U.S. GAAP, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, contingent assets and liabilities, each as of the date
of the financial statements, and revenues and expenses during the periods
presented. On an ongoing basis, management evaluates their estimates and
assumptions, and the effects of any such revisions are reflected in the
financial statements in the period in which they are determined to be necessary.
Management bases their estimates on historical experience and on various other
factors that they believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual outcomes
could differ materially from those estimates in a manner that could have a
material effect on our consolidated financial statements. While our significant
accounting policies are more fully described in the notes to our consolidated
financial statements appearing elsewhere in this prospectus, we believe that the
following accounting policies and estimates are critical to the process of
making significant judgments and estimates in the preparation of our financial
statements and understanding and evaluating our reported financial results.

Revenue recognition

The Company maintains a contract with each customer and supplier, which
specifies the terms of the relationship. The Company provides a service to its
customers (the buy-side ad networks who work for advertisers) by connecting
advertisers and publishers. For this service, the Company earns a percentage of
the amount that is paid by the advertiser, who wants to run a digital
advertising campaign, which, in some cases, is reduced by the amount paid to the
publisher, who wants to sell its ad space to the advertiser.

The transaction price is determined based on the consideration to which the
Company expects to be entitled, including the impact of any implicit price
concessions over the course of the contract. The Company's performance
obligation is to facilitate the publication of advertisements. The performance
obligation is satisfied at the point in time that the ad is placed. Subsequent
to a bid being won, the associated fees are generally not subject to refund or
adjustment. Historically, any refunds and adjustments have not been material.
The revenue recognized is the amount the Company is responsible to collect from
the customer related to the placement of an ad (the "Gross Billing"), less the
amount the Company remits to the supplier for the ad space (the "Supplier
Cost"), if any. The determination of whether the Company is the principal or
agent, and hence whether to report revenue on a gross basis equal to the Gross
Billing or on a net basis for the difference between the Gross Billing and
Supplier Cost, requires judgment. The Company acts as an agent in arranging via
its platform for the specified good (the ad space) to be purchased by the
advertiser, as it does not control the goods or services being transferred to
the end customer, it does not take responsibility for the quality or
acceptability of the ad space, it does not bear inventory risk, nor does it have
discretion in establishing price of the ad space. As a result, the Company
recognizes revenue on a net basis for the difference between the Gross Billing
and the Supplier Cost.

The Company invoices customers on a monthly basis for the amount of Gross
Billings in the relevant period. Invoice payment terms, negotiated on a
customer-by- customer basis, are typically between 45 to 90 days. However, for
certain agency customers with sequential liability terms as specified by the
Interactive Advertising Bureau, (i) payments are not due to the Company until
such agency customers has received payment from its customers (ii) the Company
is not required to make a payment to its supplier until payment is received from
the Company's customer and (iii) the supplier is responsible to pursue
collection directly with the advertiser. As a result, once the Company has met
the requirements of each of the five steps under ASC 606, the Company's accounts
receivable are recorded at the amount of Gross Billings which represent amounts
it is responsible to collect and accounts payable, if applicable, are recorded
at the amount payable to suppliers. In the event step 1 under ASC 606 is not
met, the Company does not record either the accounts receivable or accounts
payable. Accordingly, both accounts receivable and accounts payable appear large
in relation to revenue reported on a net basis.

From time to time, the Company records loss accruals for estimated costs that
exceed estimated revenue related to its contracts with customers. During the
three and six months ended June 30, 2022, the Company recognized an estimated
loss accrual (reversal) on a customer contract of $(413,918) and $375,687,
respectively, related to media costs incurred associated with a contract with a
customer, which was included in costs and expenses on the condensed consolidated
statement of operations.

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Business Combinations

Business combinations are accounted for using the acquisition method and,
accordingly, the assets acquired (including identified intangible assets), the
liabilities assumed and any contingent consideration are recorded at their
acquisition date fair values. The Company's fair value measurement of the
contingent consideration is based on significant inputs not observed in the
market and thus represents a Level 3 measurement. Level 3 instruments are valued
based on unobservable inputs that are supported by little or no market activity
and reflect the Company's own assumptions in measuring fair value.

Intangible assets

Intangible assets are comprised of costs to acquire and develop computer
software, including the costs to acquire third-party data which is used to
improve the Company's artificial intelligence platform for client use, as well
as costs to acquire customer lists, customer contracts and related customer
relationship and restrictive covenant agreements. The intangible assets have
estimated useful lives of two years for the computer software, five years for
the capitalized data, seven years for the customer lists and three years for the
restrictive covenant agreements. Once placed into service, the Company amortizes
the cost of the intangible assets over their estimated useful lives on a
straight-line basis.

Impairment of long-lived assets

The Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset might not
be recoverable. An impairment would be recognized when estimated future cash
flows expected to result from the use of the asset and its eventual disposition
are less than its carrying amount.

Stock-based compensation

The Company measures the cost of services received in exchange for an award of
equity instruments based on the fair value of the award. The fair value of the
award is measured on the grant date. The fair value amount is then recognized
over the period during which services are required to be provided in exchange
for the award, usually the vesting period. Upon the exercise of an award, the
Company issues new shares of common stock out of its authorized shares. The
Company accrues for any equity awards at fair value that have been contractually
earned but not yet issued.

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